tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, March 19th, 6:25PM

Mortgages

Mortgage Rates Daily Commentary
Monday 18 March 2024  Add your comment
Activating DTIs and loosening LVRs - NZBA

The New Zealand Banking Association (NZBA) wants the Reserve Bank to loosen proposed debt-to-income (DTI) restrictions because of the internal conservatism of some banks. [READ ON]

rss
Latest Headlines

Six-month term borrowers' best bet

A six-month fixed term is the best bet for borrowers who want to slash their mortgage interest bill, economists say.

Friday, September 18th 2015, 10:01AM

by Susan Edmunds

ASB economist Chris Tennent-Brown said because the Reserve Bank was expected to keep the official cash rate low for the next few years, rolling six-month fixed terms looked to be the cheapest home loan strategy.

Banks offer rates between 4.99% and 5.39% on six-month terms, much cheaper than floating rates of about 6%.

But the term is not so long that borrowers cannot take advantage of other offers as they come up. 

Tennent-Brown ran a mathematical calculation on interest rates, not including the banks' special rates, which are limited to borrowers who meet certain conditions, such as having 20% equity and multiple products with a bank.

He said in some cases, customers could get rates that were cheaper than the six-month rate for longer terms.

One-year specials are available as low as 4.35% and two-year specials for 4.65%.

“On an historical basis all the terms are amazingly at below long-run averages. All terms by that measure offer very attractive rates.”

But he said borrowers taking those rates would have to be aware that if rates then fell further they would be locked in and unable to take advantage of them.

If their circumstances changed, longer-term rates would be the most expensive to break.

Infometrics economist Benje Patterson agreed short-term fixed rates looked attractive. “Given these expectations of falling fixed rates, mortgage holders who choose to only fix for less than one year are likely to be able to lock in an even lower rate in the first half of 2016,” he said.

“There has been talk that a lower official cash rate, coupled with elevated competition between retail banks, could even see some special fixed rates over shorter terms slipping below 4%.  These shorter-term fixed rates could begin to rise again by 2017, if inflation picks up as the Reserve Bank is expecting and the official cash rate is increased in response.”

But he said the situation was a bit different with longer-term rates, which are more affected by global pressures.

Those who wanted to lock in a longer rate could do well to act soon.

“At present there has been downward pressure on these rates, but this pressure is expected to soon abate as the US Federal Reserve eventually begins lifting its target interest rate later this year.  As a result, mortgage holders who want the certainty of a longer-term fixed rate should bargain hard with banks over the coming months to try and secure the best rate they can now.”

Tags: interest rates

« Kiwibank adds to broker forceInterest rate rise could surprise, economist warns »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 ▼6.79 ▼6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 ▼7.29 ▼7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 ▼7.39 ▼7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 ▼6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 14 March 2024 9:32am

Previous News

MORE NEWS»

News Bites
Compare Mortgage Rates
Compare
From
To
For

To graph multiple lenders, hold down Ctrl key while clicking in list box

Also compare rates to OCR
Find a Mortgage Broker

Add your company

Use map
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com